They actually did it. The Federal Reserve just raised interest rates by another 25 basis points right in the middle of a major banking crisis. I honestly do not understand what Fed officials are thinking. They had already blown a 620 billion dollar black hole in the balance sheets of U.S. banks by raising rates so aggressively, and that resulted in the second and third largest bank failures in U.S. history earlier this month. Apparently they are not yet satisfied with the carnage that they have caused, and so they have decided to make things even worse. What we are witnessing is either extreme incompetence of epic proportions, or they are trying to crash the economy on purpose. I am sitting here trying to think of a third alternative, but so far I am coming up blank.
Fed officials can see exactly what their reckless rate hikes are doing to the system, but they are pressing forward anyway. Wednesday’s rate hike was “the ninth consecutive rate increase”…
The Federal Reserve on Wednesday raised its benchmark interest rate by a quarter of a point, forging ahead with its fight against stubborn inflation despite a spate of bank failures and a growing crisis within the financial sector.
The unanimous decision puts the key benchmark federal funds rate at a range of 4.75% to 5%, the highest since 2007, from near zero just one year ago. It marks the ninth consecutive rate increase aimed at combating high inflation.
The fact that it was a “unanimous decision” should greatly alarm all of us.
Isn’t there a single voice of reason left at the Fed?
The last time the Fed raised rates like this was just before the financial crisis of 2008.
And we all remember what that did to our banking system.
But the Fed insists that this time is different. In fact, we were just told that our banking system “is sound and resilient”…
“The U.S. banking system is sound and resilient,” the Fed said. “Recent developments are likely to result in tighter credit conditions for households and businesses and to weigh on economic activity, hiring, and inflation. The extent of these effects is uncertain. The Committee remains highly attentive to inflation risks.”
Of course banks don’t tighten the flow of credit when things are good.
They tighten the flow of credit when they get into trouble.
And it appears that another major U.S. bank is now exhibiting signs of distress…
Shares of regional bank PacWest Bancorp dropped Wednesday after the company disclosed it had shed more than $6 billion in deposits during the recent squeeze on midsized banks, though PacWest said it did not plan to raise more capital.
The bank said in a press release Wednesday that it had $27.1 billion in deposits as of March 20, which is down from $33.9 billion at the end of December and from $33.2 billion on March 9. The change appears to have largely come from venture banking deposits, which accounted for a third of PacWest’s deposits at the end of December and now stand at just 24%.
There are more than 4,000 banks in the United States today, and hundreds of them could end up failing before this crisis is over.
That would mean fewer mortgages for potential homeowners.
That would also mean fewer auto loans, credit cards and debit cards.
Unfortunately, the flow of credit is the lifeblood of our economy, and so we need our banks to be healthy.
But if the Federal Reserve continues to go down this road, bank after bank will be absolutely crushed.
Needless to say, the Fed’s insane policies are also bursting the housing bubble. At this point, U.S. home prices are down 12.3 percent just since last June…
The national median existing-home price fell 0.2% in February from a year earlier to $363,000, the first year-over-year decline since February 2012, the National Association of Realtors said Tuesday. Median prices are down 12.3% from their record $413,800 in June.
U.S. homeowners have already lost trillions of dollars of home equity, and now the Fed has just poured more fuel on the fire.
It is madness.
It is literally insane for the Federal Reserve to aggressively hike rates as we are plunging into a major economic downturn, but that is precisely what they are doing.
Look, if the long-term economic outlook was positive do you think that Walmart would be closing even more stores?…
Walmart has announced plans to close stores in Hawaii and Minnesota, which join a handful of other stores closing in several states this year.
The retail giant said the decision was made after a review process that determined the impacted stores failed to meet financial expectations, the company told USA TODAY.
Ten stores in Florida, Hawaii, Illinois, Minnesota, New Mexico, Oregon, Washington D.C., and Wisconsin will close by the end of the year, along with two experimental “pickup” locations in Illinois and Arkansas.
Walmart exists to make money.
If there was a chance that those stores could be turned around, Walmart would not be permanently shutting them down.
Sadly, other major retailers are also closing locations all over the nation.
They can see what is coming.
Higher interest rates are already crushing economic activity from coast to coast, and they are battening down the hatches.
The “experts” at the Fed are assuring all of us that they know exactly what they are doing, but the truth is that they have lost control.
As you read this article, wealthy individuals and large companies are pulling uninsured money out of small and mid-size banks all over America.
Many of those small and mid-size banks will soon be in very serious jeopardy, and that will significantly reduce the flow of credit into our economy.
Is this what they want?
Do they really want to see the U.S. economy implode?
Our leaders continue to make mind-numbingly bad decisions, and we are on a course that leads to national suicide.
When will the American people finally wake up?
Sadly, most Americans are still blindly trusting the “experts”, and the “experts” have us on a highway to extreme misery.
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Two Storms, One Harvest
Every food crisis in living memory has been a one-shock event. The 2008 price spike was a commodity bubble. The 2020 shortages were a logistics failure. The 2022 grain scare was a war on one exporter’s ports. Each time, the system bent, adjusted, and recovered, and each time the experts assured us afterward that global markets are simply too big and too diversified to fail.
What nobody in Washington seems eager to discuss is that 2026 is shaping up to be something the modern food system has never actually faced. Two independent shocks, one climatic and one geopolitical, are converging on the same harvest cycle at the same time. Not sequentially. Simultaneously.
Start with the weather. The Pacific Ocean is currently building toward what forecasters now openly call a record event. NOAA’s Climate Prediction Center puts the odds of at least a strong El Niño near 88 percent, with roughly two in three odds it reaches “very strong” status, the tier reserved for perhaps three or four events in the entire satellite era. Every major global model now projects a median peak in Super El Niño territory, and most of them project it exceeding the 2015-16 event, which until now held the modern record. Sea surface anomalies were already brushing the super threshold in mid-July, months before these events normally peak. The atmosphere has already shifted into El Niño mode, and the event is forecast to crest in late fall and early winter.
This is not about “climate change.” It’s about the standard cycles of weather, and the cycle we’re currently in is one that has likely devastated societies in the past. We’re better prepared as a society today, but not all Americans are equally prepared.
Serious households have started doing the quiet math on their own. Grocery bills tell part of the story, and the forecast maps tell the rest, which is why long-term food storage has moved from fringe hobby to mainstream line item in the family budget, with established suppliers like Heaven’s Harvest seeing demand from people who five years ago would have rolled their eyes at the idea. That instinct is not paranoia. It is pattern recognition, and the pattern is worth walking through carefully.
Editor’s Note: Heaven’s Harvest IS a sponsor, but the warnings of this article are real and would be written even if we didn’t have a survival food sponsor. With that said, those who take advantage of what they offer can use promo code “Patriot” for 15% off.
The Fertilizer Clock Is Already Running
While the Pacific warms, the second shock has been unfolding in the Strait of Hormuz. The conflict with Iran turned the world’s most important energy chokepoint into a contested waterway, and the consequences reach far beyond the gas pump. Roughly a third of global fertilizer trade moves through Hormuz, and the disruption sent urea prices up 86 percent year over year by March, with a 53 percent jump in a single month.
The World Bank projects energy prices rising about 24 percent in 2026 and fertilizer about 31 percent. By its own accounting, fertilizer prices ran 35 percent higher in the first five months of this year than the same period last year.
Here is the mechanism the nightly news will not explain. Fertilizer is not a grocery item. It is a time-delayed input. The nitrogen a farmer in Iowa or Punjab could not afford to apply this spring does not show up as a problem this spring. It shows up as a thinner harvest six to twelve months later.
The World Bank’s own food security brief concedes that the effects of reduced applications earlier this season “are likely to become visible only later in harvest outcomes.” Translate that from institutional language into plain English and it means this. The damage is already done, it is already in the ground, and we are simply waiting for it to arrive on the shelf.
Now check the calendar. Six to twelve months from the spring planting season lands us squarely in late 2026 and early 2027. Which is precisely when the strongest El Niño in the instrumental record is forecast to peak, bringing its signature droughts to Southeast Asia, Australia, southern Africa, northern Brazil, and South Asia, the very regions that grow the world’s rice, sugar, and oilseeds.
The World Bank warns openly that a strong El Niño “could disrupt multiple crop belts simultaneously” on top of the conflict-driven input costs. Their baseline projection assumes the Middle East disruptions ease by autumn. What in the last two years of Middle East history suggests that assumption is safe?
The System Has No Slack Left
The comfortable answer is that global markets always adjust. But adjustment requires slack, and the slack is gone. Global cereal production is expected to decline from last year’s records even before El Niño does its work. The UN World Food Programme, hardly a den of right-wing preppers, is calling this the most significant disruption to its supply chains since Covid and the invasion of Ukraine, and its supply chain director put the stakes bluntly.
Today’s supply chain challenges are tomorrow’s hunger crisis.
There is also a political dimension that markets cannot price. When food gets scarce, governments do not behave like economists. They behave like politicians. Export bans, hoarding mandates, and panic buying at the national level turned the modest rice shortfall of 2008 into a global crisis, and analysts are already warning that import-dependent nations are the first dominoes.
The 2015-16 Super El Niño, a far weaker event than what is now forecast, threw tens of millions into food stress across Africa and Asia. This one is projected to be stronger, and it arrives with fertilizer already rationed by price and shipping lanes already contested by missiles.
What Joseph Knew
Scripture does not treat preparation for lean years as faithlessness. It treats it as wisdom delivered in advance to those willing to act on it.
Behold, there come seven years of great plenty throughout all the land of Egypt: And there shall arise after them seven years of famine; and all the plenty shall be forgotten in the land of Egypt.
Joseph did not respond to that warning with a hashtag or a committee. He stored grain during the years of abundance, and when the famine came, Egypt stood while its neighbors begged. The lesson is not that famine is certain. It is that the time to prepare is precisely when preparation still looks optional.
Nobody who filled a pantry in a year of plenty has ever regretted it, and nobody standing in an empty aisle has ever been glad he waited for certainty.
None of this calls for panic, and panic is the enemy of sound judgment anyway. It calls for the same unglamorous prudence our grandparents considered ordinary. Keep some cash margin, know your local growers, and put real food in deep storage while it is cheap and available, because the entire arc of this story is that cheap and available is a closing window.
Families looking for a straightforward place to start can visit Heaven’s Harvest and use promo code Patriot for 15 percent off long-term storable food. The forecasts may yet soften, the strait may yet reopen, and we should pray they do. But hope is a fine thing to hold and a foolish thing to eat.
Seems to me they focus on the laws of supply and demand, but ignore the laws of mass production. The cost of producing that Model T, and the price the consumer had to pay for it, is directly dependent on the ability to manufacture higher quantities efficiently and in a short amount of time. Slow the demand to one or two Model T’s a day, and all the sudden that nice efficient production process is worthless, and the Model T is essentially as expensive as a custom-built car. The cost of production is going up, while artificially constricted demand is driving prices down, and it is then not very long before that Model T plant has to shut the doors.
Now on the supply side you’ve got multiple market forces all driving up costs, while on the demand side there are conflicting forces some trying to drive prices down and others trying to drive prices up. Well, that might possibly stabilize prices on the demand side, but all the while you’re driving supply side costs through the roof.
And whether or not artificially slowing demand could actually work is a crap shoot to begin with, because those same forces are driving down supply. Now you’ve got a race to the bottom between supply and demand, and a guessing game of which will outpace the other. At that point, you might as well be running to the highest point on the deck of the Titanic. You’re just putting off the inevitable.
Another factor is which side, supply or demand, at a given level of production, is the loan. It’s not quite as simple as supply side vs demand side. On the supply side, throughout the supply chain root system, we have both supply and demand at every level. When they go out and try to sell these interest rate manipulations, the focus is always on end consumer loans. Yet if you’re also making capital less available to the production side of things, your efforts are conflicting.
But I’m not an economist or anything. I’m sure they’re all far more knowledgeable than us commoners , and know what they’re doing – you know, since all they’ve been doing has worked so great thus far (🙄)
Then when it doesn’t work they send out the goon squad to blame the results of all their manipulation on free-market capitalism, when the mess they created wasn’t driven by free-market forces at all. Perfect smoke screen. It was the fault of them there eeeviil producers.